WORCESTER 
The Research Bureau has recommended that the city should not limit the number of licensed livery vehicles because such action would only encourage the spread of illegal, unregulated livery services.

The independent municipal think tank made the recommendation in a recently released 16-page report drawn up to address the ongoing battle for business between the city’s taxi and livery operators.

The City Council in two weeks is expected to examine a new set of proposals brokered in behind-the-scenes meetings over the past month with city officials and representatives of the two industries. Those proposals, which most likely will be sent to the council’s Municipal Operations for review, include placing a cap on the number of liveries operating in the city.

Last July, the council enacted a moratorium through the rest of the year on the issuance of new livery licenses, giving it a chance to determine how many permits should be issued and to enact new policies on livery operations.

Roberta Schaefer, the bureau’s president and chief executive officer, said the report advocates that market conditions should eventually determine how many taxis and livery limousines operate in Worcester.

“Let’s let the market decide the outcome,” she said. “As things stand now, the taxi companies are operating a monopoly. Government is not supposed to protect industry and we see that happening here.”

The agency also recommended that the city should do away with the regulation that livery vehicles accept only fares that have been arranged at least two hours in advance. It argued that the rule favors taxi companies, does not serve the public’s interest and is difficult to enforce.

To move toward a system in which the market dictates the number of cabs and liveries, the report suggested the City Council consider adopting a policy of annually increasing, by a modest degree, the number of taxi medallions. The increase, Ms. Schaefer said, could be tied to population growth. By modestly boosting the number, the medallions would not be drastically devalued.

The report said that the longer the number of medallions remains capped, the more valuable they will become and the harder it will be to increase their number, regardless of public need.

New medallions, the study suggested, should be distributed at public auction rather than given away by the city for a small fee.

Before 1980, unused medallions were turned back to the city; today, owners are allowed to sell them.

“With a limited number, these medallions today are very costly. People who buy them are making a pretty big investment,” Ms. Schaefer said. “By keeping the cap flexible and increasing the number, the medallions will be devalued to the point where the market can eventually take over.”

Cost estimates for Worcester medallions were not available. But officials said it cost about $400,000 to purchase one in Boston. In New York City, they are worth about $1 million.

The council has been dealing with the issue of livery permits following some complaints that livery operators are not adhering to regulations and that some owners are not registering their vehicles with police.

According to the Police Department, Worcester has 96 registered livery vehicles. Two major livery companies also operate in the city — Ecua Limo and New Worcester Limo. Police said it is difficult to determine the number of unlicensed livery vehicles.

Worcester has two taxi operators — the Red and Yellow cab companies. The Research Bureau said two-thirds of the available taxi medallions are now held by those firms.

The city began setting limits to the number of taxi licenses in 1964, when a quota of 100 was set.

In Worcester, taxi fares are regulated, while livery operators may charge what they want. Ms. Schaefer said livery drivers and customers often barter a fare.

Regulations are going to become less enforceable, she said, because new technology is allowing consumers to hail cabs or limos through smartphone or GPS networks.